Back in the early days of the Internet it was agreed that accepting plastic was not ideal, because it was forcing an offline system on to the Internet. New companies launched micro payment systems such as "beenz" and "flooz", but the web-based currencies didn't flourish and quickly died out. Here we are, ten years on from the commercial birth of the Internet, still typing in credit card numbers to buy online and accepting credit cards when offering things online is still hugely important.

Basically, there are two different ways to accept credit cards online. Let's compare merchant accounts. A business can either apply for their own merchant account, which allows the business to process credit cards in their own business name, or they can go with a third party solution, who does the actual credit card processing on behalf of the business selling the products. Obtaining a full merchant account has higher upfront costs, but has smaller per item charges. Using a third-party solution costs less upfront, but has higher per sale costs.

Deciding whether or not to get a full merchant account or use a third party processor is only a question of doing the math. Let's look at two different business types and compare merchant account benefits...

In most cases, merchants who are actively trading offline and simply want to expand online will most likely be suited to obtaining a merchant account. Most likely, Usually they will already have a real world merchant card processing account and will tailor that account to add the ability to do "MOTO", which is "Mail Order Telephone Order" credit card orders and simply means that the cardholder is not there at the time of purchase.

For micro businesses starting out online selling new software or a new ebook, it's strongly suggested that they begin by testing their sales using a third party payment service. The advantage to the new business is that there's hardly any initial cost so they can test their market quickly and easily. If the market is profitable, they can think about decreasing the per-transaction costs by obtaining their own merchant card processing account. If sales are poor, they can quickly leave the market without having spent a lot of cash to get their own credit card processing account.